Full text: statement by Iain Duncan Smith

The Conservative party has suffered a second serious election defeat and whilst making advances from 1997, these were not good enough and now we face a new leadership election.

Today I offer myself to stand for the leadership of the Conservative party. But before I specify my objectives as leader, I want to say a few words about William Hague.

William Hague is a man of outstanding determination, courage and principle. He believes in the future of this country and our party with great passion. Four years ago he threw himself into the job as leader of the opposition with enthusiasm, energy and always good humour. He has left us with much to build on and much to be proud of.

Whilst the election defeat was a bitter blow to the Conservatives, the low turnout is also a signal of the despair people feel about the political process under Mr Blair and the Conservatives must challenge the cynicism of this Labour government.

The leadership contest is an opportunity to break the link with past mistakes without breaking faith with Conservative principles, whilst building on successes.

The future of Conservatism lies in our beliefs and values, not by throwing them away. We need to shed associations that bind us to past failures, but hold faith with those things that make us Conservatives. There is no future for the Conservative party in attempting to be more like New Labour. We should not try to out-Blair Mr Blair.

The Conservative party must accept the need for change. We must broaden the base and the appeal of the party. The party has allowed itself to become caricatured by our opponents as a narrow sect, but this is not in the traditions of Conservatism.

Disraeli made the Conservatives the party of one nation - for rich and poor alike - more than 100 years ago. We need again to demonstrate that the party is open to all those who share our values - freedom, enterprise, responsibility and tolerance but have too often found the party unwelcoming.

It must be an objective to have more candidates who are women and from ethnic minorities at the next election. Tough decisions will need to be made but we should not shy away from them.

My second objective is to close the book on divisions on Europe. The Conservative front bench must be open to all the talents. At present, a group in the party feel unable to serve because of their concerns about the European issue.

Labour want to scrap the pound and join the euro. To do so they must hold a referendum. My views about Europe are well known and will not change.

However, I recognise that there is a minority in the Conservative party who take a different view and who may wish to campaign for entry into the euro.

The party must be able to manage the difference and do so in a mature way. I want frontbenchers to be able to serve on the understanding that as and when the referendum comes, those who disagree with the party line can temporarily stand down and campaign for the euro.

This allows the party to focus on Labour. It is they who are committed to the euro but, it seems, are frightened of calling the referendum.

The party will be able to unite and ask Labour: "Why are you so scared?" United, we will expose their five economic tests as bogus.

But these changes will not be enough to reconnect the party with the British people and that is going to be the most significant challenge that we face.

Our ambition must be to transform the public services from their present state as previous Conservative governments transformed British productive and economic performance.

In politics we tend to be preoccupied with the welfare state - in reality the real welfare state deliverers are people going about their daily lives, asking little of the state. Labour's response to their problems is another tax, another regulation, another ministerial initiative, forcing people into negative patterns of behaviour in order to be able to qualify.

Under Mr Blair, Labour is squeezing real welfare out of society. In this area, those who had the highest hopes of New Labour have been the most betrayed.

Conservative policy must be about reversing the process. To do this we must ask the question why it is that other countries both in Europe and elsewhere have better health systems, why it is they are able to embrace a broader use of the private sector.

We need to be able to look at the growing number of pensioners penalised by an array of means-tested benefits and give them back their self respect. We need to show those who will become pensioners how they will be able to save for their future and accumulate more secure and better pensions.

We need to empower teachers and parents so that they can decide the priorities of their schools rather than having to adapt their lives to more and more ministerial announcements and initiatives.

We need to appeal now to young people with young families struggling to make ends meet, worried about the state of public services.

The Conservative party must once again focus on the issues that preoccupy people in their daily lives. Their priorities must become our priorities. We must recapture the common ground of shared experiences and problems which we have allowed Labour to dominate.

We must include policies which deal with the problem of people from the market towns to decaying inner city estates.

I want to lead a crusade to put my party back in touch with all these people.

Britain is the fourth largest economy in the world. It should not have to put up with fourth rate public services.

We face a Labour government steeped in cynicism and deceit which has helped debase the currency of political debate as it crushes dissent and manipulates peoples' lives.

We must waste no time in holding them to account. The Conservative party must fight for honesty and integrity in British politics. The next leader of the Conservative party must offer a clear alternative to New Labour that challenges the dead hand of the Blair consensus.